If you own your own home and your spouse still needs a place to live, a reverse mortgage might be just the solution you seek. This allows you to borrow money on the equity you have built up in your home. When the last person is gone from the home, the money must be repaid which usually means selling the home. This is not the best choice for a home that you want to keep in the family.
If you have trouble liquidating assets quickly, short-term bridge loans are becoming more popular. They are usually available in amounts of up to $50,000 and are designed to fund the move to assisted living. They are typically used while waiting for the sale of property, or approval for a pension.
Personal income or savings is the simplest route, but the cost of a month’s rent can quickly use up your savings. You can also cash in personal investment portfolios, like 401k plans or IRAs. Often, paying out of pocket is beyond what many can afford in the long term. However, when all your resources have been exhausted, Medicaid may remain as an option.
If you have a sizable savings but are worried about outliving your resources, you may consider an annuity. When you purchase an annuity, you pay a lump sum to the underwriters and then you will receive regular payments over a specified time period (usually the rest of your life).
This is one way you can stretch out your money and make sure that you will always have some money coming in even if you live longer than you expected. The biggest benefit of an annuity is that even if your purchase premium runs out, you can get more money back than you put in. The underwriters hope to make a profit if you die early. They take the risk that you could live longer. It can be more beneficial for you than just spending your money on the cost of the stay.
Another advantage of an annuity is that it isn’t fully considered an asset by Medicaid when you apply for government assistance. The income (or your monthly payment) from the annuity is counted as a resource, but the larger sum you originally paid for the annuity is not. This can be a complex, so it is wise to have an accountant or financial adviser help you.
About Medicare & Medicaid
Medicare does not pay for the cost of living, room and board, or personal care in an assisted living or memory care. Assistance from Medicare is very limited.
Medicaid is a joint federal government program for older people with low incomes and limited assets. However, administration of the program falls to the individual states, according to the Centers for Medicare and Medicaid Services (CMS), which says “each state sets its own guidelines regarding eligibility and services.” The number of state Medicaid programs paying for assisted living is increasing, and many states also offer home and community-based services to help delay an elder’s placement in a long-term care facility.